City Hall looks to reclaim Block 37

City attorneys are researching whether and how Chicago can reclaim ownership of Block 37 if development efforts on the Central Loop tract continue to lag.

City Hall sources say the research should be completed soon and is expected to be considered by Mayor Richard Daley after he returns from a trip to Europe next week.

Spokesmen for Walton Street Capital LLC and MCZ Development Corp., which last year agreed to build a hotel/retail/residential complex on the long-vacant State Street property, declined or were unavailable for comment.

But some industry sources say the city has made such threats in the past and suggested that City Hall will not be willing to spend the amount--up to $60 million--that may be required to buy out developers. The comments came after weeks of increasing signs that the development plan has run into trouble, with construction of a hotel now seen as highly unlikely.